David Cameron predicts austerity will end in 2020. What does he think will happen then? That Hollywood will buy extravagant rights to make a blockbuster movie of austerity, delivering a giant windfall to Westminster and wiping out the UK's interest payments? That Britain will found a massive new growth industry (whose technology will remain mysterious to all other nations in the world) and the exchequer will suddenly bulge with new tax revenue? Or perhaps merely that it will take eight years for politicians to understand that the neoliberal economic theories accepted by all three main parties run contrary to their own interests and to the interests of the vast majority of the electorate?

Certainly, it's easy to see how the embrace of neoliberalism did for Labour, as it involved enthusiastically embracing the idea that private corporations should own and control the means of production, for their own benefit. Not a good look for a party founded on socialist principles.

Yet although it was the Conservatives who introduced free-market policies, the reforms in certain respects have undermined the traditional ethos of the Tories every bit as much. Where, in a globalised economy run for profit by corporations, is there room for quaint Tory values such as dedication to serving Queen and country (or what you might call public-sector employment)?

Conservatives remain confused about this deep contradiction, this break with their past, which was as profound an abandonment in its own way as Labour's watershed eradication of Clause Four. Neither party seems at all close to resolving its identity crisis, or even truly recognising that it has one. The Tory leadership mouths, "We're in this together" as an empty homily, while the rebels simply squander their frustrations on hatred of Europe. Labour continues to agonise about the pitfalls of "sounding too leftie". Yet, it congratulates itself on standing up to a wounded Murdoch as if his was the only corporation on the planet that had got too big for its boots.

Last year's conference speech from Ed Miliband, on "the producers" and "the predators" could have been mistaken for an economics lecture written for hapless primary school kids. Mostly, corporations are both of these things – even News Corp. Since the political and economic culture bends over backwards to please powerful multinationals, it's unsurprising that predatory characteristics can seem dominant.

Labour wishes to make its apologies for the mistakes of its last government and move on. Yet, there is not much room for mea culpas or critical self-examination in the two-party, first-past-the-post system – not when you can knock the other side for doing in power something pretty similar to what you had been planning yourself. There's not much room for genuinely differentiated parties, either. Both sides talk about the "centre ground" as if this were debatable territory they had chosen to defend. In truth, British politics has always been about the narcissism of small differences, and remains so.

Sure, Labour managed to unseat the Liberals in the gondola-ride of government opposition. But it took two world wars to advance the Labour party's cause in the first half of the 20th century. Yes, the rhetoric of socialism appealed, but the Tories were not hostile in principle to the idea that those who had faced horror in the service of King and country deserved "a nation fit for heroes". How could they be, when such was the very essence of their own generous and idealistic self-definition? They weren't hostile either, to the idea of a postwar reconfiguration of Europe, as that much-rebroadcast television clip of Thatcher in her pro-integration woolly jumper attests.

It was, therefore, pretty inevitable that once the New Conservatives emerged, a New Labour would emerge as well, wooing the electorate with extravagant promises that they'd do what the other guys were doing, but pro- rather than anti-socially. Well, they did that. They let big business run riot, as neoliberalism demanded, and cranked up public services with the revenue that flowed in, as neoliberalism did not demand. The fact is that over the past three decades, Britain first tried pure neoliberalism, featuring deregulation and cuts in public services, then tried neo-neoliberalism, featuring deregulation and investment in public services.

The former critically wounded the Conservatives, though they think that making the same mistake all over again is going to save them. Fools. The latter critically wounded Labour – who probably wouldn't be able to sustain another government at all if they don't achieve power at the start of one of the booms that come and go under the dysfunctional economic cycle that underpins the world economy (thus wedding them to the unappetising status quo).

In truth, unless there is wholesale reform of global economic systems, austerity will only end when the banks have regrouped enough to feel confident about starting to dole out easy credit again. Cameron's prediction of an end to austerity in 2020 may sound like a warning given by a leader unafraid to deliver bad news. But actually it's just an admission that he does not believe boom-and-bust can or should be "banished". He probably reckons that, with state spending whittled away, the next boom will be "more sustainable". He's convinced a government can't "borrow for ever", but he doesn't see that a population can't borrow for ever either, even though that was the exact precursor to the austerity he identifies such a need for.

How long can it go on – the endless game of piggy-in-the-middle whereby Labour rules in booms, the Tories rule in busts, and the LibDems occasionally get to touch the ball for a bit before dropping it? The difficult truth is that unless everything changes, nothing changes. Both parties have something to contribute.

The Conservatives must start to understand that their old ideas about public service need reviving, because the trickledown of neoliberalism manifestly has narrow limits. Labour needs to understand that redistribution can't be done by stealth, but can be done by inspiration. Telling people that they are predators isn't a good way to enlist their help in the task of refining and improving capitalism, which can be, and sometimes is conducted on social democratic principles.

Simple things could change the political and economic weather. Imagine the cultural shift if government contracts were open only to mutuals, or to the mutual divisions of larger companies. Imagine the smoothing of the economy that could be achieved if a highly regarded state institution were to take over control of the money supply. Imagine the implications of accepting that some multinationals will always opt out of paying their taxes, and that if they do choose that, then the cost of everything the state provides – from the packaging (eventually garbage) they generate, to the state-educated people they employ, to the judicial system they need to conduct their business, will be billed to them directly.

They might even start to realise that being registered for tax is a bargain. Once one political party swings in this direction, they all will, pausing only to insist that they were the ones who got there first. Otherwise, we'll have to wait for a brand new party to achieve power, which has happened only once in the democratic history of Britain. That is, I'm afraid, a near-impossible slog, without a world war or two helping it along.